AGM Statement

London Stock Exchange Group PLC
12 July 2006


                        LONDON STOCK EXCHANGE GROUP PLC

                             Annual General Meeting

                             Wednesday 12 July 2006

                   Chairman's statement by Chris Gibson-Smith


Before moving to the formal business of the AGM, I would like to take the
opportunity to talk about the prospects for your company.

On this platform last year I described the period then just ended as eventful.
At the risk of repeating myself, the past year has been equally eventful,
including two further unsolicited offers for the business from Macquarie Bank
and Nasdaq.

I will cover them later but first I want to talk about the performance of the
business since the Board's response to these offers needs to be understood in
that context.

During the year your company has continued to perform very strongly in both the
primary and secondary markets, underlining the success of our strategy which is,
first and foremost, to design and operate an equity market of superior
performance that attracts companies and liquidity from all corners of the globe.

The strategy is demonstrably working. Every aspect of our market is growing
faster than other major equity exchanges.

In the primary market we have again showed our ability to use our global brand
and to capitalise on our unique strategic position at the heart of the City of
London. Last year 622 new companies from 32 countries came to our markets
including from Russia, India and China, as well as the Middle East, South Korea,
and even the United States. AIM alone attracted 510 companies, making it by far
the world's most vibrant and successful growth market. This year money raised on
our markets reached over £21 billion - more than double the amount raised in the
previous year. Of the new companies 104 were international IPO's, nearly four
times the number that came to the entire US market. Indeed London attracted more
than two thirds of all the IPO's in Western Europe with our nearest European
rival, Euronext, attracting just 10 per cent.

This exceptional success demonstrates just how attractive London is to issuers.
London provides access to capital from around the world through an effective
market structure, in a trusted regulatory environment and under an appropriate
governance code.  We are acutely aware of the importance of the balance between
these different elements which combine to form an exceptionally attractive
market.  Your Board works with regulators and government as well as with
customers to ensure we maintain the best possible environment for a successful
equity market.

In the secondary market we are winning the battle for global liquidity. Equity
markets are undergoing a period of profound change that we are helping to drive.
The development of complex trading strategies and over the counter derivatives,
coupled with a step change in technological innovation, places a premium on
execution certainty and lower transaction costs.  As a result of investing in
next generation technology and by focusing on our customers' needs through
product innovation and competitive pricing, we have been rewarded with the
highest order book trading volume growth of the major exchanges, extending
London's advantage over other equity markets.

Over the last two years the volume of trades on our order book has grown no less
than three times as fast as Euronext and Deutsche Borse and last year value
traded on SETS grew 35 per cent. The final quarter of the financial year saw a
marked increase in order book trading, following the delivery of two key
Technology Roadmap milestones. Since then we have experienced 49 of the 50
busiest trading days ever, highlighting the success of our technology strategy
in driving growth.

This very strong performance continues to underpin the creation of value for
shareholders.  Last year it resulted in revenue up 19 per cent and adjusted
earnings per share rising by 55 per cent. It also reinforces the confidence the
Board has in the future growth prospects of the business and has enabled us to
return more than 20 per cent of our market capitalisation to shareholders in
under two years. In 2004 the Board undertook to review our capital structure in
order to strike the appropriate balance between an efficient balance sheet and
maintenance of a robust financial position appropriate for an exchange.

The £510 million of capital we returned to shareholders this year follows £163
million returned by special dividend in 2004. Last week we successfully
completed a £250 million bond issue in order to refinance our medium-term
borrowing requirements. All this puts the Exchange at the forefront of good
capital management in the exchange sector while still leaving us the ability to
invest for the future.

In addition to the capital return the Board resolved to pay a second interim
dividend, in lieu of a final dividend, for the year of 8 pence per share. This
took the full year dividend to 12 pence per share, a 71 per cent increase on the
full dividend for the previous year. The second interim dividend was paid in
May, before the share consolidation associated with the capital return, in order
for shareholders to benefit from receiving the dividend on the greater number of
shares.

The strong ongoing performance of the business validates the Board's view that
the unsolicited offer for the company from Macquarie was wholly inadequate and
did not begin to reflect the value of the business.  The offer disregarded our
unique strategic position, ignored the quality and value of our franchise and
claimed we have low growth prospects - they could not have been more wrong.

Similarly the pre-conditional offer from NASDAQ did not begin to reflect the
step change in the growth prospects of the business or the value arising from
our unique strategic position.

The Board is totally focused on continuing to deliver strong performance which
will increase value for shareholders. We will not allow these objectives to be
undermined by any transaction that is ill thought through, defensive, or because
it is fashionable. Our approach is to exercise the utmost discipline on this
matter. A transaction must deliver growth for our market and create significant
additional shareholder value that would not otherwise be achieved.

In the meantime, on the evidence to date, the rate of wealth creation by our
business continues to gather momentum, reinforcing the Board's clarity on the
value of the company.

Further very strong growth in the first quarter of this year follows the
acceleration we saw at the end of last year. Turnover for the three months ended
30 June 2006 increased 25 per cent to £84 million.  This strong performance was
driven by growth in our Broker Services and Information Services business areas.

Order book trading has continued to accelerate in the first quarter driving
Broker Services' turnover up 49 per cent.  Daily average trading on SETS was 69
per cent up with a 74 percent growth in the value of shares traded.  May was a
particularly strong month. On one day alone we breached half a million trades, a
full 43 per cent higher than the pre-May record. Indeed, the forecast we made in
February that SETS bargains will double in the three years from 2005 to 2008
looks increasingly conservative at these current rates of growth.

All the evidence points to a strategy that is delivering value for shareholders,
and growth for our customers and for our market. You the shareholders have been
alive to this for some time which is why you remain invested. As others wake up
to the advantages that we possess, it explains why so many are interested in
owning this business; despite my comments at last year's AGM that the company is
not up for sale.

The inherent value of this company is built on the unique characteristics of the
London market. These are not characteristics that can be easily replicated.

Issuers, investment banks, brokers, and investors are drawn to London by our
regulatory approach, the high standards of corporate governance and the deep
pools of international capital that reside here.  The quality and breadth of the
largest and most international asset management community in the world, the
integrity and strength this gives our market, the liquidity surge produced by
our investment in next generation technology, and our unique global brand and
reputation - all of these attributes can only be found in London.

What happens to the Exchange matters deeply to London's international financial
market and the continued global success of that market - our futures are
inextricably intertwined. This is why we fully understand that London's
stakeholders do not want a combination of exchanges that might lead to the
erosion of these attributes through the import of unsuitable regulations and
incompatible market models.  City activity is worth £19 billion a year to the
UK's current account and financial services contributes 7 per cent of our GDP,
not to mention the significant but intangible global influence for the UK that
comes from international companies listing in London.

The Board supports the wider goal of London as the world's major financial
market because that is the way to create value for you, our shareholders. We
will ensure that our actions are always congruent with that aspiration.


Further information is available from:

London Stock Exchange       John Wallace - Media                   020 7797 1222
                            Paul Froud - Investor Relations        020 7797 3322
Finsbury                    James Murgatroyd                       020 7251 3801




                      This information is provided by RNS
            The company news service from the London Stock Exchange